Daily Morning Note – 19 April 2022

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PHILLIP SUMMARY

Stocks in Asia look set for a steady start Tuesday with investors weighing the prospect for faster Federal Reserve policy tightening, and the impact on global growth and inflation from the war in Ukraine.

U.S. futures gained in early Asia trading, while contracts were higher in Japan. Australia and Hong Kong will open after the Easter break. U.S. stocks ended little changed in thin trading Monday.

Treasuries ticked lower at the long end, with the 10-year yield above 2.8%. St. Louis Fed President James Bullard said that interest rate increases of 75 basis points — while not the base case — shouldn’t be ruled out as the central banks needs to move quickly to combat inflation. The dollar gained, while the yen is in the midst of a multi-decade losing streak.

A jump in energy costs highlighted inflation concerns, as U.S. natural gas prices surged to the highest intraday level in more than 13 years. Oil trimmed gains.


Stocks to watch: SP Group

Top gainers & losers

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BREAKING NEWS

SG

After taking over 2 years to convince building owners at Tampines town centre to be part of its vision of setting up Singapore’s first district cooling system at a brownfield site, SP Group will go ahead and invest S$40 million to S$60 million to make it happen. This comes as owners of 8 buildings there – including CapitaLand, Ascendas Reit, Frasers Property and OCBC – have decided to subscribe to the solution that will see some buildings letting up their excess chiller capacity for the rest of the buildings in the network. The buildings to be connected via a 1 km underground piping network of chilled water are Tampines Mall, Century Square, Tampines 1, OCBC Tampines Centre 2, Telepark, CPF Tampines Building, NTUC Income Tampines Junction and Our Tampines Hub.

Mainboard-listed Aztech Global posted a 5.3 per cent rise in net profit to S$13.9 million year on year for the three months ended Mar 31. In its business update on Monday (Apr 18), revenue for the design and manufacturing services provider increased 10.4 per cent to S$128 million year on year. The group attributed its performance to strength in Internet-of-Things (IoT) devices and data communication products demand. Notably, the company said that revenue from IoT devices and data communication products rose 16.4 per cent to S$123.7 million year on year, accounting for 96.6 per cent of the group’s total revenue. However, inflationary cost pressures negated some of the improvement in revenue and led to margin compression of between 60 and 110 basis points for earnings before interest, taxes, depreciation and amortisation (Ebitda), pre-tax profit and net profit year on year in its Q1 FY2022.

The trustee-manager of Keppel Infrastructure Trust on Monday (Apr 18) reported a 21.1 per cent decline in distributable income for the first quarter ended Mar 31, 2022 at S$44.7 million, from S$56.6 million a year earlier. This was due to a decline in distributable income contributed by Ixom within its distribution and storage segment by 20.7 per cent to S$19.4 million. The company provides specialised source water, water and waste water treatment solutions to supply clean water. It also supplies key water treatment chemicals, industrial and specialty chemicals. The trustee-manager noted that Ixom expanded its product offerings with the acquisition of Bituminous Products and divested its Fiji business to focus on its core capabilities.

UOB Malaysia on Monday (Apr 18) named its deputy chief executive officer (CEO) Ng Wei Wei as the bank’s first CEO effective May 1, 2022. Ng assumed the role of deputy CEO in 2021, and spent the earlier part of her career with UOB Malaysia from 2000 to 2006. She held various leadership roles at other financial institutions in Malaysia and Hong Kong before returning to UOB Malaysia in 2019 as managing director and country head of wholesale banking. Ng succeeds Wong Kim Choong, who will relinquish his current position as chief executive after leading the bank since 2012. He will take on a new role as senior adviser to oversee the acquisition of Citi’s consumer banking assets, up until his planned retirement.


US

Bank of America beat estimates for first-quarter profit on Monday (Apr 18), as strong growth in its consumer lending business helped offset a hit from a slowdown in global deal-making. The bank reported a 9 per cent rise in consumer banking revenue to US$8.8 billion in the quarter ended March. “First-quarter results were strong despite challenging markets and volatility,” chief financial officer Alastair Borthwick said in a statement. “Net interest income increased by US$1.4 billion versus the year-ago quarter supported by strong loan and deposit growth. Going forward, and with the forward curve expectation of rising interest rates, we anticipate realising more of the benefit of our deposit franchise.” However, total investment banking fees plunged 35 per cent to US$1.5 billion in the quarter.

The World Bank is slashing its forecast for global economic growth this year, citing the war in Ukraine, inflation and the lingering effects of the pandemic. The World Bank now expects the global economy to grow at a rate of 3.2 per cent in 2022, down from its previous estimate of 4.1 per cent, its president, David Malpass, said Monday morning. The World Bank estimated that the global economy grew 5.7 per cent last year. The updated projection comes as policymakers from around the world head to Washington this week for the spring meetings of the World Bank and the International Monetary Fund (IMF).

Bitcoin dropped to its lowest level in more than a month as cryptocurrency continued to be hurt by investors’ risk aversion amid signs of muted new interest in the coins. The largest cryptocurrency fell as much as 4.2 per cent to US$38,580 on Monday (Apr 18). Second-largest Ether dropped 4.7 per cent, declining to as low as US$2,902. The global crypto market’s value dropped about 4 per cent in the past 24 hours to US$1.9 trillion, according to pricing from CoinGecko. Technical charts suggest that despite Bitcoin’s recent drop it’s “not close to an oversold reading”, and near-term support at US$35,000 likely won’t hold, said John Roque, technical analyst at 22V Research, in a note on Sunday. “We continue to believe that it will get to the US$30,000 level,” he said.

Source: SGX Masnet, The Business Times, Bloomberg, Channel NewsAsia, Reuters, CNBC, PSR


POEMS Podcast: Let the Money Talk

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2Q22 Singapore Equity Strategy – SGX Company Insights Ep 49

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